Can Solana (SOL) Revive Itself After Choking On The Ashes Of FTX?

Key Takeaways:

  • Solana network remains the most infected project from the FTX contagion.
  • However, network metrics indicate more bearish headwinds for SOL.
Can Solana (SOL) Revive Itself After Choking On The Ashes Of FTX?
Solana network might not be able to recover from its recent downfall. Image from Pngtree

NEW DELHI (CoinChapter.com) — Solana remains the worst affected by the fallout of crypto exchange FTX’s downfall, despite SOL price jumping nearly 22.6% from Nov 22’s low of $10.9 to an intraday high of $13.4 on Nov 23.

Despite the recent recovery rally of the token, SOL price has fallen the most among the top 16 crypto tokens by marketcap over the last seven days. FTX founder Sam Bankman-Fried’s association with the Solana network has become poisonous for the blockchain platform.

Once the FTT sell-off began, Alameda resorted to selling its other assets to protect its FTT holdings. At the time, Alameda had nearly $1 billion in SOL tokens, which led to SOL price nosediving. The Solana token fell 72% from November’s high of $38.8 to a low of $10.9 on Nov 22.

Moreover, Alameda withdrew its staked SOL tokens when the platform unlocked them, flooding the market with more Solana tokens. That added to the bearish pressure against SOL.

Not Just Alameda And FTX, Network Metrics Add To Solana’s Bearish Pressure

SOL bulls might make a case that once Alameda’s SOL sell-off stopped, the token might chart a comeback. However, SOL’s real volume has declined for more than a year, indicating a lack of investor interest in the blockchain.

Not Just Alameda And FTX, Network Metrics Add To Solana's Bearish Pressure
Solana’s real volume has been declining for some time now. Source: Messari

The decline was higher during Oct, likely due to a collapse in NFT buyers.

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Meanwhile, Solana’s total volume locked (TVL), a measure of the platform’s DeFi footprint, has dropped more than 97% from its all-time$ high of $10.17 billion ( Nov 9, 2021) to a low of $287.3 million on Nov 23 this year.

TVL on Solana has declined drastically from its Nov 2021 high
TVL on Solana has declined drastically from its Nov 2021 high. Source: DeFiLlama

Considering the bearish crypto market and the resulting fall in SOL price, Solana bulls might defend the falling TVL due to factors out of the network’s control. However, TVL values in terms of SOL tokens paint a similar picture.

Solana’s TVL peaked at an SOL ATH of 68.21 million SOL tokens in Jun 2022. Currently, the TVL is down 66.2% from its ATH, falling to 23.11 million SOL tokens.

Analysts continue to hold SOL tokens, speculating most of the sell-off might have resulted from traders trying to front-run Alameda. However, Solana’s network outages do not work in work in favor of the blockchain platform.

Solana (SOL) Price Paints A Small Recovery

SOL prices painted a slight recovery on Nov 22. Moreover, long bottom wicks on the daily candles indicate bulls are still putting up a fight.

If the token continues to rise, SOL prices might needle above immediate resistance near $13.7. A break and hold above immediate resistance would help provide the Solana token the momentum to rise to resistance near $15 before downside corrections pare gains.

Solana (SOL) Price Paints A Small Recovery
SOLUSD daily chart with RSI. Source: Tradingview.com

Meanwhile, the relative strength index for SOL moved into neutral regions after being oversold for more than a week. The RSI is currently neutral, with a value of 31.69 on the daily charts.

If SOL fails to hold current price levels, the Solana token might fall to test support near $12.3. Moreover, if immediate support fails, the SOL price might fall to $11 before recovering.

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